Tuesday, September 13, 2011
Which Credit Score is Your Real Credit Score?
Knowing your credit score before you apply for a car loan, mortgage, credit card, or other financial service can be critically helpful and can save you a lot of time and trouble. However, not all credit scores are the same, and so it can be extremely confusing for consumers who try to make sense of the different scores posted by the multitude of different credit rating agencies.
FICO scores are the most trusted of credit rating schemes, as they provide a reliable snapshot of a consumer’s creditworthiness for lenders. Yet there are numerous other credit rating schemes that may provide different scores for the same consumer. Equifax, for example, can report a FICO score, but it also has the proprietary Equifax Credit Score. While FICO rates credit with a score from 300 to 850, the Equifax Credit Score rates from 280 to 850, creating the possibility for discrepancies in identical borrowers. Experian Credit Scores range from 330 to 830; TransUnion TransRisk New Account Scores range from 300 to 850 and are most similar to FICO scores; VantageScore credit ratings range from 501 to 990. The reality is, there will almost certainly be differences in credit ratings between the different credit rating agencies, but for most consumers who are merely attempting to keep track of their rating on a regular basis, an exact FICO score isn’t necessary.
Consumers that are preparing to take out a significant loan, a mortgage for example, would be better off obtaining a precise FICO score. TransUnion and Equifax can provide FICO scores to consumers on a one-off basis for a flat fee, or in a subscription format for consumers that will require multiple views. Accurately knowing one’s credit score prior to applying for a loan can help consumers to more effectively work with bank officers to achieve the best possible terms. For that reason, the fees associated with pulling one’s FICO score might be justified for a consumer preparing for a home loan, but for the casual consumer only interested in a snapshot of their credit the non-FICO credit scores will certainly be sufficient.